The UK overtook China to become the world’s second-highest funded tech startup ecosystem in the first half of 2024, according to a report.
UK tech businesses secured funding worth $6.7bn (£5.2bn) between January and June 2024, behind only the US.
While H1 2024 funding is a 12% drop compared with the $7.7bn raised in the second half of 2023, the UK still surpassed China’s $6.1bn investment, according to data collected by Tracxn, a global market intelligence platform.
It is a notable milestone for the UK as it has historically ranked third globally behind the US and China for startup funding.
However, the UK did overtake China for the first half of 2022, before moving down to third place for 2023 as a whole.
According to the Tracxn report, there were 321 funding rounds, 15 acquisitions and 206 Series A cycles in China in the first half of the year – while the UK came in with 476 rounds, 195 acquisitions and 216 Series A investments.
UK tech funding was given a significant boost during the period by two so-called ‘megarounds’, including the $1bn raised by autonomous vehicle startup Wayve and $826m from fintech Abound.
But it’s worth noting that despite the country leapfrogging China in some metrics, the UK is still lagging in IPOs (three) and new unicorns (one). There were seven IPOs and three newly created unicorns in China over the same period.
Russ Shaw CBE, founder of Tech London Advocates and Global Tech Advocates, said that “the UK overtaking China in tech startup funding is another feather in the cap for the sector”.
He added: “However, it’s important to emphasise that China very much remains an international tech superpower. With businesses there increasingly eager to engage with the rest of the world in recent times, it is vital that British tech startups look for ways to collaborate with this massive market when the time is right to expand internationally.”
Seed funding drops
Late-stage investments slumped in the UK between January and June, standing at $3bn. This was a 23% decline from the $3.9bn raised in the latter half of 2023 but up 30% year over year.
Another drop occurred at the seed funding stage. Startups secured $540m in H1 2024, a drop of 7% from the $575m raised in H2 2023 and a decline of 43% raised in H1 2023.
Early-stage funding dropped by 12% year over year, from $3.7bn to $3.2bn.
Overall, UK tech funding, acquisitions and unicorn creation were down in H1 2024.
In 2022 the UK tech industry was valued for the first time at $1tn (£764bn), a landmark milestone that had previously only been reached by the US and China.
The figures, which combined the valuations of the UK’s public and private technology companies, put the value of the UK tech industry at more than double that of Germany and almost five times larger than France and Sweden.
“On the starting grid that is the international tech ecosystem, the UK now unquestionably holds a very strong position,” said Shaw.
“Unlike at Silverstone this weekend however, it will be co-operation – not competition – with other major players which will be key to maintaining this standing, particularly in the key tech verticals which will define the next half of the decade.”
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